HomeMy WebLinkAbout16-79 RESOLUTION•
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RESOLUTION NO. 76,-79
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A RESOLUTION AUTHORIZING THE MAYOR AND CITY CLERK TO
EXECUTE A RETENTION AGREEMENT WITH ARKANSAS BLUE CROSS AND
BLUE SHIELD, INC.
BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY
OF FAYETTEVILLE, ARKANSAS:
That the Mayor and City Clerk are hereby authorized and
directed to execute a retention agreement with Arkansas
Blue Cross and Blue Shield, Inc. A copy of said agreement
marked Exhibit "A" is attached hereto and made a part hereof.
PASSSED AND APPROVED this oRG TALday of /CA/.
1979.
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APPROVED:
MAYOR
MICROFILMED
DATEJUN 1 4 1979
REEL _\ 0t 2
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ARKANSAS BLUE CROSS AND BLUE SHIELD, INC.,
RETENTION AGREEMENT
FOR
CITY OFFAYETTEVILLE
GROUP NUMBERS 102137 & 111821
This Retention Agreement applies to the above group.
The agreement is a retrospective refund calculation and will be determined
using earned premiums and incurred claims of Blue Cross, Blue Shield and
Major Medical coverage. The effective date of the agreement is to be
April 1, 1979. Each Contract Year constitutes a period for accountability
of premiums and incurred claims and hereafter will be referred to as a
Refund Period. The refund will be calculated one hundred and fifty (150)
days after the end of each contract year, except if termination occurs
at the end of a contract year; then the refund, if any, and the rate
stabilization reserve, if any,due the groups shall not be due until the
expiration of twelve (12) months following the groups' termination. In
the event the groups terminate Blue Cross and Blue Shield coverage before
the expiration date of their contract, the groups shall not be entitled to
a refund or any monies in the rate stabilization reserve, if any.
The composition of the formula used to determine the refund amount and
the definition of each item contained in the formula are as follows:
Earned Premium - Blue Cross and Blue Shield and Major Medical
income for the refund period.
Retention - The amount retained by Arkansas Blue Cross and
Blue Shield for general administrative expenses, general
contingency, and insurance risk. The retention used in
establishing the refund amount is 11.5% of earned premium.
Claims Cost - Claims cost is the amount of earned premium
required to pay contract benefits for claims paid during the
refund period regardless of incurred date, plus the estimated
cost for claims unpaid at the end of the refund period,
less the estimated claims cost for unpaid claims at the end
of the previous refund period, plus claims administration
expense. Included are contract benefits for maternity claims
incurred within nine (9) months of a group member's transfer
to another Arkansas Blue Cross and Blue Shield category of
business and paid during the refund period.
-2 -
Rate Stabilization Reserve - The amount of income maintained
in reserve for the group by Arkansas Blue Cross and Blue
Shield to offset unusual fluctuations in claims. This will
be 15.5% of income for the contract year beginning April 1, 1979.
Once the reserve is established, it will be credited with
interest earned during subsequent periods.
Refund - "The retrospective refund shall be earned premium
minus the sum of claims cost plus retention minus the
adjustment to the stabilization fund. The formula is
illustrated as follows:
EARNED PREMIUM - (CLAIMS COST + RETENTION) - ADJUSTMENT
TO STABILIZATION FUND = REFUND
The refund shall be paid to the City of Fayetteville."
This agreement may be terminated by either the Contract Holder or the
Plan at the end of the contract year by thirty (30) days' prior notice
in writing.
Date:
Date:
4277
ARKANSAS BLUE CROSS AND BLUE SHIELD, INC.
CITY OF FAYETTEVILLE